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UK growth better than expected

UK growth better than expected

Category: Economy

Updated: 01/11/2011
First Published: 01/11/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The UK economy picked up by 0.5% in the third quarter of the year, defying expectations.

Analysts had forecast growth more in line with the second quarter, when the economy expanded by just 0.1%.

But performance was helped by a 0.5% increase in the production sector – a vast improvement on the quarter two fall of 1.2%, figures from the Office of National Statistics (ONS) show.

The service sector also performed far better in the three months to the end of September, with activity up by 0.7%, against an increase of 0.2% in the previous three months.

The riots in August are not thought to have had any significant impact on UK GDP.

However, the figures were tempered by the ONS, which warned that performance in the second quarter of the year was hit by one-off events, such as back-to-back public holidays and the Royal Wedding.

It means that the rises cannot be thought of as such a strong economic bounce-back as would normally be the case.

The ONS said that over the longer-term, economic performance has grown by 0.6% in the last six months and by 0.5% over the last year.

The Chancellor of the Exchequer reacted to the figures by saying that the coalition's current plans were the only route that would take the UK back to 'prosperity and recovery'.

But Azad Zangana, European economist at Schroders, said that the figures for the third quarter of the year could be the best seen for some time.

"Looking ahead, this could be the strongest GDP number we see for a few quarters as leading indicators are pointing to a meaningful slowdown.

"This latest number by no means signals that recession fears have abated. The Manufacturing PMI released this morning by Markit fell very sharply from 50.8 to 47.4, where 50 is the neutral point between expansion and contraction."

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